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TMX Group saw operating expenses jump by 13% in the three-month period to $118 million.

A sharp decline in commodity prices, combined with higher expenses, has forced TMX Group Limited‘s (TSE:X, Mkt cap 2.86B, P/E 29.78, Div/yield 0.40/3.04, EPS 1.77, Shares 54.33M) profit down by 8.2% in the first quarter, meaning it comes in short of analyst estimates, Reuters reports.

TMX saw operating expenses jump by 13% in the three-month period to $118 million.

TMX, which owns and operates the Toronto Stock Exchange and the TSX Venture Exchange, saw operating expenses jump by 13% in the three-month period to $118 million, as charges relating to headcount reductions took their toll.

However, the Toronto-based firm anticipates the headcount reductions to amass ongoing cost savings of around $4.3 million on an annual basis.

The quarterly report showed TMX to have net profit attributable to shareholders of C$42.6 million ($35.22 million), or 78 Canadian cents per share, compared with a profit of C$46.4 million, or 86 Canadian cents per share, 12 months ago.

Excluding one-time items, the firm earned 91 Canadian cents per share. Analysts, on average, had expected TMX to earn 97 Canadian cents a share, according to Thomson Reuters I/B/E/S.

As well as having to battle with falling commodity prices, TMX also faces competition from the new Aequitas Neo exchange, which is prepared to charge lower fees in exchange for market share.

In light of the Aequitas’ arrival, TMX last week announced it would slowly reduce its rebate and fee structure to address concerns about its incentives model.

TMX’s revenue, however, climbed roughly 2% to C$185.3 million – something Lou Eccleston, CEO of TMX Group, was quick to remark upon. He said: “Once again, we experienced revenue growth on both a sequential and year over year basis. We benefited from our investments to build diversified revenue streams as we were able to offset those areas of our business that were impacted by reduced commodity prices.”

The TMX Group Inc. (formerly Maple Group Acquisition Corporation) is the parent company of TMX Group Inc. The company owns and operates stock exchanges including the Toronto Stock Exchange, and the TSX Venture Exchange. The TSX Venture Exchange was previously known as the Canadian Venture Exchange. TMX also owns the Montreal Exchange, the Natural Gas Exchange and the Boston Options Exchange.

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The opinions expressed here are ours alone. They are provided for information purposes only and are not tailored to the needs of any particular individual or company, are not an endorsement, recommendation, or sponsorship of any entity or security, and do not constitute investment advice. We strongly recommend that you seek advice from a qualified investment advisor before making any investment decision.

The operator will launch a new business, called TSX Private Markets, that will help local start-ups raise money and eventually go public. The business will target the private “exempt” market and will specialize in voice-brokered services to help companies gain access to capital in the early stages of their development.

The service will be operated by TMX’s unit Shorcan Brokers Limited, which is a registered Exempt Market Dealer. The business is expected to start operating in the third quarter of the year, pending final regulatory clearance.

TMX stated that the launch of the new service would provide registered dealers, accredited investors and other exempt investors with “access to unique investing opportunities.”

Kevan Cowan, president of TSX Markets and group head of equities at the company, said that the new business will help Canadian start-ups find the money they need to get their business off the ground, something they have long found difficult to achieve. In an interview with CP24, he said that small and medium-sized firms play a critical role in the economy and facilitating their growth and access to funding is key to keep them thriving.

TMX’s announcement came a few days after the Ontario Securities Commission proposed new rules that would allow start-ups and young companies to raise up to $1.5 million a year from individual investors through registered crowd-funding web portals.

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The opinions expressed here are ours alone. They are provided for information purposes only and are not tailored to the needs of any particular individual or company, are not an endorsement, recommendation, or sponsorship of any entity or security, and do not constitute investment advice. We strongly recommend that you seek advice from a qualified investment advisor before making any investment decision.